Taxes: What are they and Where did they Come From?
Taxes: What are They and Where Did They Come From?
I don’t know about you, but I ask myself “Why do I pay so much in taxes?” all of the time. Think about it. Depending on where you live, you could potentially be paying tax on your income to the federal government (IRS), the state government for the state in which you live (there are some states that don’t assess income taxes), and a local tax if the city or township you live in assesses a tax for living there (not just New York City).
Now add in payroll taxes. In addition to your federal and state (and sometimes local) withholdings, most of you pay into Social Security (teachers usually have their own retirement plans they pay into) and Medicare. If you’re lucky enough to own your own business, you pay in the employees’ portion of Social Security and Medicare, as well as the employer’s matching portion,
If you don’t own a business, most of us don’t even realize our employers are taxed on their employees. Basically, those entrepreneurs and business owners are taxed just for having employees. We just accept what our paycheck says and we bring home whatever we can from our jobs. We usually don’t think about the impact on our employers.
What about sales tax? Most of us (again, not all) pay sales tax on goods and some services that we purchase. Do you eat out at a restaurant? Have you ever noticed the tax on the bottom of bill? Or what about buying a new pair of shoes? Again, usually you pay sales tax on those shoes. I could go on and on for quite some time. I’ve only listed the bigger tax items that most people are aware they pay.
The truth of the matter is, however, most of us don’t really know why or how these taxes work.I suggest that if we, as a society, started educating ourselves on how and why taxes exist, we could empower ourselves to educate our children and families on the role taxes play in our life today. Not only the role taxes play in your annual or monthly income and our monthly budgets, but how those taxes translate to how our government works.
Once we educate ourselves, we can then demand changes to the status quo. We could start making changes to school curriculum, so our children have a fighting chance of avoiding what we have gotten ourselves into as a society. We can and should hold our Congresspeople accountable for our tax money. The bottom line is that government, whether it is federal, state, or local, is not in the business of generating revenue.
Think about it. What product or service do they produce? They are not a money making business. They are a money taking business. So if they are taking your money, and boy are the ever, don’t you want to know why they assess taxes, how they assess taxes, and what they spend your tax money on?
This series of articles will focus on income taxes. When did we start to pay income taxes (not as early as you think)? Why did we start to pay income taxes? How does Congress come up with the tax law? How does Congress spend our tax money? Why do we have annual deficits and aggregate debt as a country when the government is collecting our tax dollars throughout the year?
The sooner we begin to educate ourselves about how our taxes work, the sooner we can empower ourselves and our children to take control of our own financial reality and our financial future. Financial freedom truly is the key to most other freedoms we hold so dearly, and we hold the key to that freedom.
Disclaimer: These are not official statements of the LYCRs